Topic 8

• full employment

  the condition in which virtually all who are able and willing to work are employed.
• price stability

  when the overall level of prices changes slowly or not at all
• economic growth

  the ability of the economy to increase the production of goods and services
• balance of payments

  a measure of the total flow of money into or out of a country
• GDP

  the total market value of all final goods and services produced annually in an economy
• GDP per capita

  GDP/population
• Real GDP

  GDP adjusted for inflation
• unemployment

  Measures the number of people who are able to work, but do not have a job during a period of time.
• structural unemployment

  unemployment that occurs when workers' skills do not match the jobs that are available
• seasonal unemployment

  unemployment caused by seasonal changes in the demand for certain kinds of labour
• frictional unemployment

  unemployment that occurs when workers have left one job but not started another
• cyclical unemployment

  unemployment that rises during economic downturns and falls when the economy improves
• Inflation

  a general increase in prices and fall in the purchasing value of money.
• Consumer Price Index

  an index of the cost of all goods and services to a typical consumer
• cost-push inflation

  When prices rise due to an increase in the cost of production.
• demand-pull inflation

  increases in the price level (inflation) resulting from an excess of demand over output at the existing price level, caused by an increase in aggregate demand
• balance of trade

  the difference between a country's total exports and total imports
• current account surplus

  Where the revenue from the export of goods and services and income flows is greater than the expenditure on the import of goods and services and income flows in a given year.
• Current account deficit

  Where revenue from the exports of goods and services and income flows is less than the expenditure on the import of goods and services and income flows in a given year.
• current account

  the section in a nation's international balance of payments that records its exports and imports of goods and services, its net investment income, and its net transfers
• income inequality

  the unequal distribution of income
• Wealth Inequality

  the unequal distribution of assets within a population
• Taxation

  The action of the taxing authorities levying a tax.
• Government Spending

  spending by all levels of government on final goods and services
• Redistribution of income

  The transfer of income through government taxation, spending and assistance programs targeted at particular income groups. The goal is to transfer money from higher-income groups to lower-income groups.
• economic objectives

  the main economic goals of the government
• employment

  measure of labour available to work that are in work
• rate of inflation

  the measurement of price changes over a time period, usually a year
• distribution of income

  how income is distributed across an economy
• real value


  any monetary values which are statistically altered to strip out the effects of inflation
• nominal value


  an economic value which does not take into account inflation